Correlation Between Global X and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Global X and SPDR SP at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Global X and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Renewable and SPDR SP Health, you can compare the effects of market volatilities on Global X and SPDR SP and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Global X with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and SPDR SP.
Diversification Opportunities for Global X and SPDR SP
Very good diversification
The 3 months correlation between Global and SPDR is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Global X Renewable and SPDR SP Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Health and Global X is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Global X Renewable are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Health has no effect on the direction of Global X i.e., Global X and SPDR SP go up and down completely randomly.
Pair Corralation between Global X and SPDR SP
Given the investment horizon of 90 days Global X Renewable is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, Global X Renewable is 1.06 times less risky than SPDR SP. The etf trades about -0.06 of its potential returns per unit of risk. The SPDR SP Health is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 9,132 in SPDR SP Health on August 24, 2024 and sell it today you would earn a total of 12.00 from holding SPDR SP Health or generate 0.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Renewable vs. SPDR SP Health
Performance |
| Timeline |
| Global X Renewable |
| SPDR SP Health |
Global X and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and SPDR SP
The main advantage of trading using opposite Global X and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, SPDR SP can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SPDR SP will offset losses from the drop in SPDR SP's long position.| Global X vs. Global X CleanTech | Global X vs. Global X Clean | Global X vs. Global X Wind | Global X vs. Global X Thematic |
| SPDR SP vs. Global X Clean | SPDR SP vs. Global X Renewable | SPDR SP vs. Global X Thematic | SPDR SP vs. Global X AgTech |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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